Power has been fully restored at Sydney airport's domestic Terminal 2 after an outage lasting more than three hours on Friday morning - but for many passengers the wait is not over.

"Delays are expected to be ongoing because of the knock-on effects," a Sydney airport spokeswoman said.

"It's affected some other airports; it ends up affecting the entire network."

Large crowds at Sydney airport after a power outage at T2 terminal. Photo: Kane McChesney

The spokesperson said the source of the outage had been isolated to a substation but the cause remained unclear.

A cheer rose from the crowd at Terminal 2 just after 11:30am when power returned. A few minutes before noon, the first passengers went through security.

Flights delays are expected to continue throughout the afternoon, and passengers should contact their airlines for flight enquiries.

Crowds at Sydney Airport on Friday after a power outage. Photo: Helen Hayes

"Sydney Airport has identified an issue with a substation, which caused the power interruption and affected back-up power sources," the spokeswoman said.

The outage, which started at about 8.30am, had meant that baggage handling and check-in facilities were down and passengers arriving for flights could not be screened by security.

Qantas services from the T3 Sydney domestic terminal were unaffected. But the scenes were chaotic at the T2 domestic terminal, which services airlines including Virgin Australia, Jetstar and Rex.

Kane McChesney, a 19-year-old musician, and a fellow band member are travelling to Melbourne with Jetstar for a performance later on Friday evening. He said he was pushed up against the end of the terminal as crowds continue to build, with little room to move.

"It's packing in more by the second," he said.

Mr McChesney said other members of the band had passed security earlier and were using facilities inside the terminal which have retained power. He said waiting passengers have been told that the problem is "being fixed".

"There's a default message that keeps playing over the sound system that says they've found the source of the problem and are working on it."

By mid-morning the airport was packed with people standing around, complaining about a lack of information. Some were lying down on their luggage, others spent their time on the phone trying to negotiate refunds with airline companies.

A violinist was providing a jaunty tune as distraction while airport staff walked through the crowds handing out bottled water.

Jess Scully, who had been waiting in line for an hour and a half, said the delays "pretty much ruined my day."

She was due to travel on the only direct flight to Launceston on Friday.

"[Virigin staff] don't know what flights are leaving or if more flights are going to be put on.

"It's really inconvenient."

A Virgin spokesman was unable to say how long the delays would last, and noted that the power outage was not a Virgin issue but a Sydney airport issue.

Raquel Hamnett had already felt the impact of power problems leaving Phuket airport in Thailand on Wednesday night. Now she faces another major delay before she gets home to Noosa.

"We are just so tired, that's why we're lying all over the place," she said.